As we blogged about here, the United States Supreme Court in Viking River Cruises, Inc. v. Moriana divided PAGA claims into two buckets: (1) individual PAGA claims; and (2) representative PAGA claims (a claim somewhat akin to a class action). The U.S. Supreme Court wrote that once the individual claim was compelled to arbitration, the individual should lose representative standing (e.g., the class-like PAGA claim should be dismissed). The issue, however, remained open.
That’s where Adolph v. Uber Technologies, Inc. stepped in. In Adolph, the plaintiff alleged that he did not lose standing to bring a representative PAGA claim after his individual PAGA claim was compelled to arbitration. The matter made its way to the California Supreme Court.
Just today, the California Supreme Court ruled that “Where a plaintiff has brought a PAGA action comprising individual and non-individual claims, an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.”
This means that the current law of the land is representative PAGA claims survive even after arbitration of individual PAGA claims. The benefit of dismissing the class-like PAGA claim after successfully compelling arbitration of individual PAGA claims is gone, and California employers cannot rely on the favorable ruling in Viking River. Look for courts to “stay” (i.e., pause) the representative PAGA claims until arbitration of the individual PAGA claims conclude.
All hope is not lost. The Court approved a prolonged procedure whereby the representative claim is stayed, the individual claim is arbitrated, and if the employee is successful in arbitration, then the employee may proceed in court as an aggrieved employee. If they lose in arbitration, then the Court reasoned that may be the end of the line [as we discussed here].
Look for Uber to appeal the decision to the U.S. Supreme Court. However, the prevailing view is that chances of the U.S. Supreme Court taking this issue on appeal is low because it recently took up the Viking River case and the issue at hand is primarily a state issue.
What this means for California Employers: This ruling impacts potential wage-and-hour exposure even where an arbitration agreement is in place. Revisit your arbitration agreements to ensure they have a severability clause and that they do not require dismissal of representative PAGA claims. As always, conduct a wage-and-hour audit to reduce the chances you will fall prey to a PAGA claim, or if you get hit with one, the damages will be contained.